The 45bn euro ($64bn: £40bn) plan aims to balance Italy's budget by 2013, a year earlier than had been planned by slashing public spending and jobs.

PM Silvio Berlusconi said the measures were painful but unavoidable. On Monday the European Central Bank announced it would buy Italian debt in a successful effort to lower its cost of borrowing.

The new measures come on top of a previous round of spending cuts announced in July which aimed to balance the budget by 2014.

Italy's borrowing costs rose sharply before the move as investors lost confidence in the government's ability to reduce its deficit.

The ECB move increased the pressure on the government to bring forward detailed plans to balance the budget by 2013.